* More customers adopt high-margin "Pulse" monitoring
* Board approves up to $2 billion in stock buybacks over 3
* Shares up 2.3 percent
By Nick Zieminski
Nov 27 Price increases helped lift sales and
earnings at ADT Corp in its initial quarter as an
independent company, and the home security services provider
said more customers were adopting its high-margin "Pulse"
The former Tyco unit also said on Tuesday that its
board had approved buying back up to $2 billion in stock over
three years and was considering taking on more debt to invest in
its business, partly at the urging of a large shareholder.
Corvex Management LP disclosed a 5 percent stake in ADT last
month. The investment firm was founded by Keith Meister, one of
activist investor Carl Icahn's longtime associates.
"They asked us to rethink ... what our capital structure
should be and the opportunity to take on more debt," ADT Chief
Executive Officer Naren Gursahaney said in an interview.
"We'll be looking at the debt markets over the next few
weeks," he said. "(The fiscal cliff) could affect what
availability is, and the price of debt, so we'll keep an eye on
how markets respond."
ADT reported net earnings of $94 million, or 40 cents per
share, for the fourth quarter ended on Sept. 28, up from $93
million, or 39 cents per share, a year earlier.
Excluding restructuring and separation costs, ADT earned 43
cents a share, meeting Wall Street expectations, according to
Thomson Reuters I/B/E/S.
Sales rose 2 percent to $812 million, with recurring revenue
from existing customers accounting for almost all of the total.
The Boca Raton, Florida-based company forecast a 4.9 percent
to 5.2 percent rise in recurring revenue in fiscal 2013. It did
not immediately provide an earnings-per-share outlook.
Shares of ADT were up 2.3 percent at $44.10 in trading
before the market opened.
The company is the market leader in security monitoring
services for homes and small businesses in North America, while
Tyco retains the ADT name in other regions.
ADT has described the U.S. and Canadian home security market
as highly fragmented and said it would use acquisitions to
increase its subscriber base, grow in the small business market
and move into other businesses such as home health monitoring.
Recent price hikes by ADT lifted average revenue per user
but also led some customers to cut off service, pushing up
attrition rates to 13.8 percent.
Despite the higher attrition, the net number of customer
accounts rose in the quarter. The higher revenue per user also
reflected a shift by some customers to the more-expensive Pulse
home monitoring system.
ADT said it had about 180,000 Pulse customers, about 3
percent of its total customer base of 6.4 million.